Ghana Association of Banks Threatens to Suspend Loans to Public Sector Workers Over CAGD Delays

• The Ghana Association of Banks warned it could halt new lending to government workers whose salaries are processed through the CAGD
• GAB CEO John Awuah said banks are awaiting three months of outstanding loan repayment remittances as of October
• The banking sector faces pressure to cut its non-performing loan ratio to 10% as directed by the Bank of Ghana

The Ghana Association of Banks (GAB) has warned it may suspend new loans to public sector workers within weeks unless the Controller and Accountant-General's Department (CAGD) clears a backlog of unremitted loan repayments deducted from government employees' salaries.

GAB Chief Executive Officer John Awuah made the declaration at the association's 43rd Annual General Meeting in Accra, framing the potential action as a last resort after years of failed attempts to resolve the delays.

Awuah described the situation as one in which salary deductions for loan repayments have already been taken from public sector workers, including teachers, nurses and doctors, but the CAGD has not passed those funds on to the banks. He said this created a financial burden the industry could no longer sustain.

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"We are now very hard-pressed, and we are likely going to take a very unusual step of suspending lending to all government workers whose salaries are processed to the Controller and Accountant General," he said.

He added that the outstanding arrears stretched back three months as of October, and that banks were being forced to record impairments on what should have been settled debts. "We want to see a stronger banking system, but we can't have a stronger banking system when the profit we make is eaten away by impairments that are completely avoidable," Awuah said.

According to the GAB chief, the problem has recurred for more than a decade. A prior suspension was averted after the Chief Director of the Ministry of Finance personally intervened and committed to resolving the matter, but the delays have since returned.

"We are in October; we are in a race for three months. And banks are having to take the hit because the Controller has refused to do what they have to do," he said.

NPL Ratio Pressure Adds Urgency

The threat comes at a time when the Bank of Ghana is pushing commercial banks to bring their non-performing loan (NPL) ratio down to 10%, a target that makes the unremitted deductions an increasingly pressing concern for the sector.

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Awuah also cautioned against drawing comparisons between Ghana's lending rates and those of other countries in the sub-region without accounting for the differences in their NPL ratios, arguing that Ghana's situation reflects structural challenges rather than poor lending practices.

He expressed hope that the CAGD would act swiftly to transfer the outstanding funds and avoid a suspension that would directly affect public sector workers seeking credit. The association maintained that resolving the remittance delays remained the most straightforward path to sustaining affordable lending and supporting broader economic growth.

Banks that give out house loans

Earlier, YEN.com.gh reported that several banks in Ghana provide mortgages to help qualified customers purchase, build, complete or renovate houses.

Applicants generally need a stable income, good property documents and the ability to make monthly repayments.

Comparing interest rates, deposits, fees, and repayment periods is important before choosing a home loan

Source: YEN.com.gh